The European Chips Survey was launched on 16 February 2022 with the aim to better understand current and forecast demand for chips and wafers, the complexity of the value chain, industry prioritisation for chip fabrication activities, the impacts of the chip supply crisis on European industry and the industry appetite of public support initiatives.
This factual summary report provides an initial high-level analysis of the findings of the European Chips Survey. The report provides a snapshot and delivers key insights into the complex semiconductor market, while uncovering best practices for analyses into sensitive strategic dependencies.
In total, the survey received 141 responses. Over half of respondents were large enterprises, and just under half represented medium, small and micro-sized enterprises. 76 organisations had business activity on the supply side, 22 on the demand side, 16 were active on both the supply and demand side (e.g., automotive original equipment manufacturers producing finished cars and also being involved in semiconductor design), while the remaining did not self-identify as either category.
The ecosystems represented in the European Chips Survey include the electronics, mobility, digital, health, renewable energy, energy intensive, construction, defence, aeronautics, agri-food, retail, proximity/social economy/civil security, cultural and creative industries, and the chemicals sector.
Guaranteeing the confidentiality of responses was critical in establishing the trust required for companies to reply to the survey. Further to this, the survey balanced question sensitivity with value-add to ease company hesitancy to respond (e.g., when asking about semiconductor procurement, specific geographies were not requested, but rather a simple statement as to whether it was inside or outside of Europe). The key takeaways were as follows:
Chip demand is expected to double between 2022 and 2030, with significant increases in future demand for leading-edge semiconductor technologies.
- The future chip demand across industrial ecosystems is expected to double between 2022 and 2030, alongside a significant increase in demand for wafers. For example, the automotive ecosystem nearly doubles chip demand by 2030 partly due to an increased demand for discrete semiconductors.
- In the short- to medium-term there is an overall increase in demand for smaller chip technology sizes, based on data primarily from the electronic, automotive, digital, health, and renewable energy ecosystems.
Companies establishing new chip fabrication facilities cite qualified labour and government regulations as key when selecting the location, while focusing less on customer proximity.
- Organisations establishing new fabrication facilities (fabs) highly prioritise the availability of a qualified labour force, operational costs, existing infrastructure, IP protection / legal security, levels of bureaucracy and compliance requirements.
- When establishing a new location for a fab companies indicated that government speed, ease of access and levels of bureaucracy were slightly more important than the amount of subsidies or tax incentives.
- When selecting a fab to manufacture chips, companies prioritise the technical aspects of the chip itself, quality of service, delivery time and price.
- Companies operating fabrication facilities or those relying on fabs do not highly prioritise geographical proximity. Neither risk hedging through geographical diversification nor proximity to customers was highly prioritised.
The supply crisis affects all ecosystems, and is expected to last at least until 2024 forcing companies to take costly mitigating measures.
- The chip supply crisis adversely affected overall production for most suppliers surveyed, and for all the respondents from the ecosystems.
- Most respondents do not expect an end to the current disruptions before 2024. The supply side was slightly more optimistic than the demand side, projecting the crisis to end sooner.
- Respondents were overwhelmingly prepared or had already taken mitigating measures to counter the adverse impacts of the chip shortage, such as attaining new suppliers, strategic investments, reducing chip usage, stockpiling etc.
- The survey showed that respondents were reluctant to provide long-term forecasting, probably due to the volatility of the market. A significant number of respondents did not forecast past 2025, leaving some of the findings beyond 2025 with limited data. To reflect this in the summary report, some of the findings do not display data beyond 2025.
Semiconductor research and development funding was mostly relevant for companies on the supply-side, however the support initiatives are also relevant for the demand-side.
- More than 4 out of 10 demand side respondents also had business activity related to the semiconductor supply side, demonstrating the complex nature of the value chain.
- Member State and European R&D funding remains more relevant for activities of businesses on the supply side, as compared to the demand side, however funding was still relevant for more than 15% of demand side respondents.
- A significant majority of supply-side companies, and those operating on both supply and demand sides, found pilot lines to be relevant for their organisation. 1 in 4 demand side companies found pilot lines relevant.
- Most companies on both demand and supply sides deemed innovation in node shrinkage relevant for their business activities.
- Respondents on the supply side were more engaged in selling, purchasing, or both, of semiconductor intellectual property. However, more than 15% of demand side companies also purchase semiconductor intellectual property, with some signalling that they consider custom chips important to stay competitive.
Overall, the findings of the semiconductor survey correspond to similar findings in the Commission staff working document A Chips Act for Europe, published on 11 May 2022. For example, with regards to the impacts of the current chips crisis adversely affecting individual industrial ecosystems, the results of the European Chips Survey support the conclusion of the staff working document. The European Chips Survey also complemented these observations, by looking into whether companies had or were taking mitigating measures to address the supply crisis.
The European Semiconductor Expert Group is working to establish a monitoring system for the semiconductor value chain. The European Chips Survey provides key methodological insights that can positively shape and inspire such future monitoring initiatives, on chips and on other strategic components of interest.